Jump start your new tour and activity business through distribution.
5 Tips to starting a successful tours and activity travel business. This is Tip #3.
In the first two articles I wrote about how to partner and package to help your start up get business in the early stages. This third article is about implementing a simple distribution system so at launch you have other marketers and or marketplaces selling your tour and activity products.
There are many new tour and activity distributors and tour and activity marketplaces like Viator, TourCMS marketplace, Isango, GetYourGuide, Kijubi, Smart Destinations and Kumutu. The tour and activity distribution system has been expanding, just Google “tour and activity distribution,” to find one-to-two distribution partners that fit your business model.
Depending on how you run your new tour and activity business it may be smart to allocate a % or a # of your tours and or activities solely for your new distribution partners. If you can find a partner that can resell your tour and activity in real time from your website database or online system this is the best route as this enables you to ultimately maintain all your inventory in one system.
Don’t get caught up in paying a commission and or a % of your sales to your new distribution partners when you start your business. Small business owners have this mentality that they think they are loosing money on the transaction when they could be selling it themselves directly. Another way to view paying a commission and or a fee to a 3rd party distribution partner is to view it as an acquisition cost or a cost to acquire a new client.
When you start a new business it takes time to determine your acquisition cost per client. A simple equation of an acquisition cost per client is your total marketing and adverting dollars spent divided by the # of clients you acquire. When you start your business you’ll most likely have a marketing and advertising budget and you’ll be spending money to get new business. If your distribution partners acquire you new clients you can use the commission cost or fee paid to the 3rd party as the basis for how much it costs you to acquire new clients.
You can boost your business and get off the ground quicker by enabling one-to-two tour and activity distributors to sell your travel product. This is a quick way to get new business fast and it will help you determine the cost to acquire new clients.
Matt Zito is a veteran travel industry entrepreneur, consultant and founder of the world’s first ever, Travel Business Academy, a professional member-based, home-study program that teaches entrepreneurs globally, how to start and run a travel business. To learn more visit the Travel Business Academy or email matt@travelbusinessacademy.com
Distribution is the number one challenge facing small operators. Start ups always think they will take the market by storm but 99% of the time that does not happen. Direct sales of any volume are difficult to reach because by definition it means that the operator has skill in marketing which most do not. However, direct sales is the area operators should put the most effort into and learn how to become good direct marketing people. Once that is nailed distribution should be brought on board to help with yield management. The challenge with distribution is the huge amount of content management that it requires to feed all the different potential channels. I have done several activity tours and travel start ups and distribution has been the main challenge in them all. It is nothing to do with the commission % I will pay leading rates as I understand COA it is picking the right partners who can sell product. Most do not deliver and hence a lot of content production work goes to waste. Eventually, hopefully soon we will have a solution to upload all product to a central database that can be pulled by all distributors but I am not holding my breath.
As always Peter, some excellent advice from a seasoned pro. I agree with you that taking the time to learn how to master your own destiny and increase your direct to consumer sales is important. I also think that operators need to start thinking about distribution early even if they are not yet ready to tackle it. There is no one system that will make it easy to manage content across multiple sales channels. The hotel industry has been dealing with this for years, so it is nothing new. For the tour and activity space, however, it tends to be even more difficult, because these are small businesses with limited resources. The distribution opportunity is a two way street, suppliers have to be interested in distributing and distributors have to be interested in connecting with suppliers. Without both parties, it’s a zero sum game.
Hi Stephen
Hope you are well.
Totally agree that both parties have to have a strong and binding interest in helping each other. The major challenge I see for the distributor side of the issue is that they are trying to mass distribute volume product of activities and tours online and process the booking online. We all know that in this marketplace the consumer likes to communicate with the actual provider of the experience as no online system can cover all the multitude of questions and concerns of the consumer.
Systems need developed where the consumer ends up in discussion with the operator and if booked the distribution partner gets commission of what ever level has been agreed. This will enhance conversion rates significantly and both parties will be happy with the arrangement.
Obviously for simple tours like a city tour online straight forward booking is suitable but do we really ever think that consumers will book a 14 day adventure trekking holiday in Nepal without having a discussion with a human? Of course an experienced small % will but it will only ever be a small %.
Distribution start ups and platforms need to change the mindset from being focused on transactions to focusing on connections. Connect the two sides together so conversation can happen and earn for that connection.
As always easy to say and hard to do. Have a great 2012 Stephen
I found this conversation fascinating. Per what Stephen was saying, if it was possible to have this done online, would the effort be worth it? I mean, what kind of margins would be required to make it profitable for both sides?
Incredibly beneficial cheers, I believe your current followers would likely want way more content such as this continue the good effort.
Great comments Peter – about the need for actual interaction with the tour operator or guide. We built touristlink with that in mind so that tour operators can create profiles and then interact with customers on a social platform. We are probably not focused enough on the transaction at this point but are looking for ways to implement this in coming months.